2002 (10) TMI 179 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 90/88-C.E. dated 1-3-98 regarding exemption for granulated slag.
2. Availment of Modvat credit on inputs used in the manufacture of Pig Iron.
3. Applicability of Rule 57D of the Central Excise Rules, 1944.
4. Invocation of the extended period of limitation for duty payment evasion.

Interpretation of Notification No. 90/88-C.E. dated 1-3-98:
The case involved a dispute over the exemption of granulated slag under Notification No. 90/88-C.E. The Appellants argued that granulated slag is a waste product generated involuntarily during the manufacturing process of Pig Iron and should be considered exempt. They cited expert opinions and previous tribunal decisions to support their claim. The Department contended that the Appellants had availed Modvat credit, thereby violating the conditions of the Notification. The Tribunal examined the nature of granulated slag, referencing past judgments that deemed Blast Furnace slag as non-excisable. Consequently, the Tribunal ruled in favor of the Appellants, stating that since the product was non-excisable, the Notification did not apply, and no duty demand or penalty was justified.

Availment of Modvat credit on inputs:
The Appellants argued that they had not availed Modvat credit on raw materials used in manufacturing Pig Iron but only on consumables essential for production. They contended that the Modvat credit was not related to the final product's manufacture, as per the conditions of the Notification. The Tribunal analyzed the provisions of Rule 57D, which validated Modvat credit even if the inputs were part of waste, refuse, or by-products exempted from duty. Ultimately, the Tribunal found in favor of the Appellants, emphasizing that the Modvat credit availed did not breach the Notification's conditions.

Applicability of Rule 57D of the Central Excise Rules, 1944:
The Appellants argued that Rule 57D validated Modvat credit on inputs, even if they were part of waste or by-products exempted from duty. They highlighted that the rule allowed credit on inputs used in or in relation to the manufacture of finished products. The Tribunal considered this argument in conjunction with the nature of granulated slag and the Appellants' production process. The Tribunal's analysis led to the conclusion that the Appellants did not violate Rule 57D, as the Modvat credit availed was not in contravention of the rule's provisions.

Invocation of the extended period of limitation for duty payment evasion:
The Appellants contended that the extended period of limitation should not apply as there was no intent to evade duty payment. They supported this claim by stating that all necessary documentation, including classification lists and returns, had been regularly submitted and accepted by the Department. The Tribunal acknowledged this submission and ruled in favor of the Appellants, stating that no suppression of facts with an intent to evade duty payment was evident. Therefore, the extended period of limitation was deemed inapplicable in this case.